A sound knowledge of stress and coal cleat permeability, both varying with continued gas production from coalbed methane (CBM) reservoirs, is critical in order to determine how to best produce the reservoir. CBM reservoirs are unique due to their exhibiting shrinkage of coal matrix associated with release of gas, resulting in increased permeability. This paper describes the work carried out focusing on the stress and cleat permeability variations as a function of declining reservoir pressure. A new experimental technique was developed to estimate the variation of permeability and monitor the stress evolution under best replicated in situ condition, namely the uniaxial strain. The experimental results showed that decreasing reservoir pressure resulted in a significant decrease in horizontal stress and increased permeability for methane. The horizontal stress decreased linearly for depletion. Using the laboratory established permeability trend, cleat compressibility was estimated by application of the exponential relationship between changes in effective stress and permeability. The results showed that the cleat compressibility was not a constant during the course of depletion and a bi-model variation was able to describe the variation well.